Does Quicken update tax categories to match tax code each year?

Tom Pottenger

This may seem like a really dumb question, but you don't know till you ask. Does quicken update tax categories / tax lines with every major (e.g. yearly) change of the tax codes, identifying what is no longer a deductible, for instance? It has occurred to me that I may have to do this manually if Quicken doesn't do it. Does anybody know? I've never seen anything about it.

Tom Pottenger

You've all gotten lost in details, but they're details I didn't ask about. And perhaps that's my fault; I may not have been clear. The question was not about changing Categories, but changing tax line items for those Categories so that the tax line items conformed to the new tax code, and does that happen whenever the tax code changes. The answer seems to be "no".

Frankx

Hi @Tom Pottenger,

The short answer is "yes" each year Quicken changes its tax category / tax line assignments based on changes to the Internal Revenue code.  That allows it to work with TurboTax.

Frankx

Tom Pottenger

Thanks, Frankx!

Frankx

@Tom Pottenger

Happy to help - take care!

Frankx

volvogirl

I doubt that it does.  You can still take the deductions on state returns.  So you would still need to enter them into Turbo Tax.  You can enter them on the federal side and Turbo Tax decides what you can deduct, not Quicken.  

Rocket J Squirrel

Frankx said:

The short answer is "yes" each year Quicken changes its tax category / tax line assignments based on changes to the Internal Revenue code. 

Perhaps I'm misunderstanding this reply, but I don't believe this is the case. Quicken does not change the associations between categories and tax line items. That is up to the user.

Chris_QPW

I agree have never seen the never change and in fact they tend to be years behind in the cases where new tax lines are added.

Ps56k2

Tom Pottenger said:  Does quicken update tax categories / tax lines with every major (e.g. yearly) change of the tax codes, identifying what is no longer a deductible, for instance?

Like what.... for example ?

Rocket J Squirrel

When this is handled, it is handled in the Tax Planner. Below is a snip showing where the TP imposes the new $10k limit on deductible state & local taxes.

Ps56k2

tnx - was trying to think of anything in the Category List that would point to a Tax Line Item, and then get "changed" - forgot aout the SALT cap, and maybe some other amounts that get affected.... but still thinking of the overall Category vs Tax Line Item.

Frankx

@Rocket J Squirrel and @ps56k,

Just an FYI, the SALT cap does not change any "tax line" in Q or otherwise. If they itemize deductions and want to deduct ANY state & local (S&L) taxes, taxpayers are still required to report all S&L taxes on their return. The limitation on such a deduction is a calculation on a tax line below the total S&L taxes paid line on Schedule A.  So that is an inaccurate example of a "tax line item that changed".

@volvogirl and @Chris OPW,

The question was whether Quicken "updates tax categories / tax lines" and I stand by my "short answer" since none of the above comments have proved that answer to be incorrect.

Frankx

Tom Pottenger

Frankx, I'm going to disappoint you. I got online with support yesterday and was informed that Quicken does not (has not been) adjusting / updating any tax line items. It's up to the user. I found that hard to comprehend. However, it's possible that their product (TaxCut?) converts or translates those tax line items to match what is in the tax product. But the support agent could not answer that question either.

I would suggest that, for those of us who use quicken for tax time, PRINT OUT a tax summary to aid in use of the tax product (Tax Cut or whatever else) you're using. I think we can still export/import files, but we'll have to review and determine if we're getting what we expect.

Ps56k2

Tom Pottenger said:  Quicken does not (has not been) adjusting / updating any tax line items. It's up to the user. I found that hard to comprehend.

Well, like @Frankx - I would be interested in an example of a Quicken defined Category that has changed relative to a Tax Line Item as per the Category List screen....
Not the potential math (tax cut SALT)
but the entire concept of the Category <--> Tax Line Item

Rocket J Squirrel

Frankx said:

Just an FYI, the SALT cap does not change any "tax line" in Q or otherwise. ... So that is an inaccurate example of a "tax line item that changed".

It was not intended to be such an example. Just the opposite. It was meant to show that this type of calculation ("what is no longer deductible" as in the original question) is handled in the planner and not by tweaking tax line items.

Tom Pottenger

You've all gotten lost in details, but they're details I didn't ask about. And perhaps that's my fault; I may not have been clear. The question was not about changing Categories, but changing tax line items for those Categories so that the tax line items conformed to the new tax code, and does that happen whenever the tax code changes. The answer seems to be "no".

volvogirl

I think we have answered that.  But can you give an example of what a change would be?  I think all the categories still go to the same old tax lines.  Then whether or not those items are deductible will be decided by the tax program.  ps....Quicken used to be owned by Intuit the parent company of Turbo Tax.  

Frankx

Hi again @Tom Pottenger

Thank you for that information.  Needless to say I am somewhat surprised that Q Support would say that.  I did a quick compare of the tax.scd files for 2020 and 2019, and while there were only 3 changes to those files from one year to the other (three new lines were added in 2020, to wit: 640, 641, and 642) there were 3 changes that Quicken made.  But that may be somewhat beside the point.

There actually haven't been many recent changes to the substance of Federal tax laws in recent years (even though there was a significant reformatting of the "look & feel" of US tax forms for both 2018 and 2019).  For example, there have been no significant changes to categories of taxable income nor to the itemized deductions so the standard categories would not change much from year to year.  I am finding it very hard to believe that - according to what support has told you -  individual users are expected to make any and all changes to tax lines going forward. I would however, expect users to make those changes that are unusual or one-off situations.

That being said, I took a look at one standard expense category "Childcare", which I don't use but I believe is widely used, and discovered that it does not have a tax line assigned, which is hard for me to believe since qualifying expenses in that category have been deductible (or available as a credit) for many years.

I apologize that my "short answer" missed the mark.

Take care.

Frankx

[Minor edit to add the numbers of the 3 new tax lines changed in 2020 file]

Chris_QPW

Maybe a bit of a flow of events might put this in prospective.

When you create a new data file the default categories are going to be created.  Some of them will be assigned to tax lines.  There are also other events like adding a paycheck that adds categories, which in turn have tax lines assigned to them.  The same for some business actions.  Note that some of those categories are "built in" and you can't change them or their tax lines.

Other than that Quicken is never going to touch your categories.  You are free to add categories and assign tax lines and adjust the "non built in" categories tax lines.

Since the user can create their own categories and tax lines it would be impossible for Quicken to "adjust them" as time goes on.

And on the subject of tax lines, they are a "fixed list" in Quicken, and so this gives "possible tax lines" that can be assigned.  This is the list that I said Quicken Inc seldom changes and hasn't been updated in years (as in there are missing tax lines).

Now for how the reports, Tax Planner, and TurboTax use this information.

It is no surprise that a database query can be done on various tax lines to pass this information to above, but clearly this isn't a "magical connection".

As in for a Schedule A report they look at which tax lines apply do a query for them and then create the report.  The same is going to be true of the Tax Planner, and TurboTax.  So when things change there are always "two sides" that have to change.

If a new tax line is added then to "see it" the reports, Tax Planner, and TurboTax all have to change.

In some cases like the ones above the tax line information doesn't change, instead there are just different limits or if it is deductible, or such.  For those cases the reports wouldn't change, but Tax Planner and TurboTax would, but not because of they do any different to get the data, just how they use that data.

q_lurker

Let me try a specific example in support of "Doesn't change".

I have a category "Investment Exp" set as a 'tax related category' associated with tax line "Schedule A: Investment management fees".  The description for that line says in part "Investment management fees are deductible as a miscellaneous deduction."  I have had that category with that tax line assignment for decades.  

Those fees are now NOT deductible, though I suppose there could be some exceptions.  The use of and option for and description of that tax line has never changed as far as I know and recall.

Further, since I made the assignment (I think), as Chris said, I would not expect Quicken to change the assignment.  

volvogirl

You should probably leave the default tax lines alone.  Some deductions are only suspended from 2018-2025.  After that they may come back.
https://ttlc.intuit.com/community/tax-reform/help/which-federal-tax-deductions-have-been-suspended-by-tax-reform/00/25565